On July 1, 2016, Rio Corporation Issued Bonds with a Face

Multiple Choice

On July 1, 2016, Rio Corporation issued bonds with a face value of $100,000 and 12% interest payable semiannually. The bonds mature on June 30, 2021. The market rate of interest at the time of issuance was 14%, so the bonds were issued at a discount of $7,054. Using the effective interest method, the amount of discount that should be amortized by Rio on December 31, 2016, is

A) $702.35.
B) $506.22.
C) $493.75.
D) $423.21.